Property Insurance Pre-Study Assessment Questions

Reporting form

A property policy form used when it is difficult to provide the insurance company with an accurate statement of values because of fluctuations in inventory from month to month.

Open peril policy

An insurance policy that insures against all risks of loss that are not specifically excluded by the policy.

Insurer

The entity that a licensed agent legally represents in an insurance transaction.

Coverage A

The amount of insurance needed to qualify for replacement cost coverage, which in this case is $48,000.

Ordinance or law coverage

This additional coverage provides an additional amount of insurance for the increased costs of repair due to zoning laws.

Nationwide Marine Definition

A definition that does not include personal shipments.

Actual cash value (ACV)

Replacement cost, less depreciation.

Insurance Broker Representation

An insurance broker legally represents the insurer.

Businessowner Policy Example

A hardware store would best be written on a businessowner policy.

Businessowners Policy Crime Coverage

A businessowners policy provides employee theft coverage.

Flood Insurance Exclusions

Flood insurance does not cover leakage of pipes.

Homeowners Policy Coverage

Property coverage in a homeowners policy is broken down into dwelling, other structures, personal property, and loss of use.

BOP Coverage B

BOP Coverage B protects against loss to business personal property.

Stock Insurer

A stock insurer pays dividends that are taxable and not guaranteed to shareholders.

Unclear Insurance Policy Language

An insurance policy that contains unclear language will be interpreted against the party who wrote the contract.

Insurable Interest in Property Insurance

In property insurance, an insurable interest must be present at the time the policy is written and also at the time of loss.

Conditions Section of Insurance Policy

The conditions section of an insurance policy describes the duties of the insured and the insurance company.

Authorized Insurer

An authorized insurer is a company that is approved by the state's department of insurance to transact insurance business in the state.

Rebating Definition

Rebating is offering a client anything of value for purchasing insurance.

Waiver Definition

A voluntary relinquishment of a known right is called a waiver.

Condominium Homeowners Form

An individual who owns and lives in a condominium can obtain broad coverage for personal property under the HO-6 homeowners form.

Loss Payable Clause

A loss payable clause protects a lender when an insured purchases a new car.

Standard Mortgage Clause

Nothing the insured does can prevent the mortgagee from collecting under the standard mortgage clause.

Insurance Law Enforcement Responsibility

The Commissioner, Director, or Superintendent is responsible for enforcing state insurance laws and regulations.

Utility Services Endorsement Coverage

The utility services (direct damage coverage) endorsement for the BOP provides coverage for direct damage to insured property caused by utility failure.

Fair Credit Reporting Act

The Fair Credit Reporting Act obligates insurers that use a third-party source to acquire credit information to inform applicants who have been denied coverage of the identity of that source.

Condominium Association Coverage Exclusions

Condominium association coverage forms insure all against direct physical loss or damage except personal property owned, used, or controlled by the condo unit owner.

Commercial Package Policy Audit Period

An insurance company may examine and audit a commercial package policy (CPP) insured's books and records for up to 3 years.

Business Income Policy

A business income policy would cover lost revenue for a business that is forced to close during a period of restoration after a covered physical damage loss.

Difference Between DP-2 and DP-3

The basic difference between the dwelling DP-2 and DP-3 is that the DP-3 provides open peril coverage on the dwelling and other structures.

Dwelling Policies Exclusions

Dwelling policies may be used to insure all of the following except farm dwellings.

additional coverages

considered coverage extensions

optional coverages

usually require an additional premium

extra expense coverage form

coverage that will permit the insured to continue in business without interruption following a property damage loss

maximum limits for flood insurance coverage under the regular program

$250,000

Extended reporting period

is not a listed condition in the commercial property conditions form

first named insured

the person whose name is listed first in the declarations and is assigned certain responsibilities and obligations

Coverage D

covers lost rental revenue if the dwelling was being used as a rental property

binder

provides temporary coverage until the policy is issued

appraisal method

the method used to determine the value of a loss, should the adjuster and the insured disagree

agent's license termination reason

After receiving verbal permission, the agent signed the insured's name on the insurance application.

owners of a mutual insurance company

Policyowners

replacement cost on a partial loss

the amount of insurance carried must be at least 80% of replacement cost

Self-insurance

an example of retention type of risk management

broad form causes of loss

includes all risks except voluntary parting with covered livestock

misrepresentations in an application

can be a basis for voiding an insurance policy only if they were material misrepresentations

Indemnification

the attempt to restore an insured to his pre-loss condition

Declarations page

contains information about the location of the insured property

commercial package policy interline endorsements

are those endorsements that apply to more than one coverage form

penalties for unfair practices

the chief officer of an insurance department may not order imprisonment for willful violators

misrepresentation

the unfair practice committed when a client is told a homeowners policy covers earthquake when it does not.